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Paying Taxes in

Nepal

Below is a detailed summary of the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as administrative burden in paying taxes and complying with postfiling procedures.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 190 economies. The most recent round of data collection was completed on June 1, 2016 covering for the Paying Taxes indicator calendar year 2015 (January 1, 2015 – December 31, 2015).

Compare Nepal to 189 other economies.

Tax or mandatory contribution Payments (number) Notes on Payments Time (hours) Statutory tax rate Tax base Total tax rate (% of profit) Notes on TTR
Corporate income tax 3 125 20% taxable profit 17.67
Employer paid - Social security contributions 12 84 10% gross salaries 11.28
Ownership renewal tax on vehicles 1 NPR 27,000 fixed fee 0.40
Tax on interest 0 15% interest income 0.38 not included
Municipal business tax 1 NPR 10,000 fixed fee 0.15
Municipal tax on vehicles 1 NPR 3,000 fixed fee 0.04
Stamp duty on financial contracts 1 various rates 0.00 small amount
Capital gains tax 1 20% capital gains 0.00 included in other taxes
Land revenue tax 1 NPR 100 for each 5476 sq. ft. property area 0.00
Property tax 1 various rates land value 0.00
Value added tax (VAT) 12 130 13% value added 0.00 not included
Totals: 34.0 339.0 29.5
  • Taxes by type Answer
    Profit tax (% of profit) 17.7
    Labor tax and contributions (% of profit) 11.3
    Other taxes (% of profit) 0.5
    Answer Score
    Postfiling index (0-100) 33.5
    VAT refunds
    Does VAT/GST exist? Yes
    Frequency of VAT/GST refund submission monthly
    Does a VAT/GST refund process exist per the case study? No
    Restrictions on VAT refund process Carry forward for 6 months
    Likelihood of VAT audit N/A
    Time to comply with VAT refund (hours) N/A 0.0
    Time to obtain a VAT refund (weeks) N/A 0.0
    Corporate income tax audits
    Does corporate income tax exist? Yes
    Likelihood of corporate income tax audit Likely
    Time to comply with a corporate income tax audit (hours) 29.0 49.5
    Time to complete a corporate income tax audit (weeks) 5.0 84.4
    Administrative appeal process
    First level administrative appeal authority Director General of Tax Department
    Is the appeal authority independent? Independent department within tax office
    Are appeal guidelines accessible to the public? Yes
    Source of appeal guidelines Online/in printed publication
    Is there a legal time limit for the appeal authority to issue a decision on the tax appeal? Yes
    Legal time limit 30 days

Notes:

Name of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table.

The hours for VAT include all the VAT and sales taxes applicable.

The hours for Social Security include all the hours for labor taxes and mandatory contributions in general.

The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax audit and time to complete a corporate income tax audit.

N/A = Not applicable.